What protects people from very deep poverty, and what makes it more likely?
These briefings look at the effect of work, housing, and the importance of social and financial safety nets, on the dynamics of very deep poverty. What must be done to make sure we can all afford life’s essentials when our circumstances change?
Hardship is intensifying in our country. Around 6 million people face very deep poverty[i], nearly 1.5 million more than 20 years ago. This should concern us all, as going without essentials like enough food or warmth and facing the stress and anxiety of how to make ends meet harms people’s physical and mental health, their social connections and their ability to get on in life.
In this context it is essential to understand what can protect people from, and increase their risk of being tipped into, very deep poverty. The Joseph Rowntree Foundation (JRF) analysis of Understanding Society – a large, nationally representative data set that has tracked the lives of the same households over more than a decade – enables us to look at this in detail.
It also gives us further insight into the groups most likely to move into very deep poverty. These include families with children, especially lone parents, large families and young families, households headed by a single adult, disabled people, carers and both social and private renters.
But that is not to say the group of people in very deep poverty is fixed – many people move in and out as their circumstances change. Between 2017–18 and 2020–21, an average of around 2.5 million people moved into, and a similar number moved out of, very deep poverty each year. Across this four-year period, 10.4 million people in the UK (around one in seven) experienced very deep poverty in one or two years. A smaller, but still sizeable group, experienced persistent very deep poverty, with 1.9 million living in very deep poverty in at least three out of these four years.
So what are the events and circumstances that protect people from very deep poverty and make it more likely people experience it?
What protects people from very deep poverty?
Money matters, so anything that increases income has a protective effect. In addition, having savings to fall back on or having people to call on for support can also protect people from some of the worst effects of very deep poverty. Typically, around half of people in very deep poverty escape it the following year (50.5%), but exit rates vary between different groups of people, and certain life events and circumstances greatly increase the likelihood. Some of the best strategies are:
- Draw a pension. Some 73% of people aged 55 or over who were living in very deep poverty moved out of very deep poverty when they started to receive their state pension, compared to only 45% of those who did not. A similar pattern is seen among people starting to claim a private pension. It is a great strategy, but only for those of the right age.
- Get a job with a secure contract. In workless households in very deep poverty, 58% of people in households where someone moves into work exit very deep poverty, compared with 40% in households that remain workless. For workers, moving from part-time to full-time work and other steps to increase earnings also increase their exit rate. But to maximise the chances of exiting very deep poverty, job security also matters. A worker in very deep poverty who moves from a temporary to a permanent contract has a 62% chance of moving out of very deep poverty, compared to a 49% chance if they stay in temporary work. Being paid a salary rather than by the hour or task also brings greater security, and moving from being a non-salaried to a salaried worker increases the likelihood of exiting very deep poverty by more than 10 percentage points (from 58% to 69%).
- Get the benefits you’re entitled to. Disabled people have a high risk of very deep poverty, but the receipt of benefits such as Personal Independence Payments has a significant impact. Newly disabled people who start to receive these additional cost disability benefits have half the rate of entry into very deep poverty of newly disabled people who do not. In addition, newly disabled people who start to receive additional cost disability benefits are almost fifty percent more likely to exit very deep poverty than those who did not start to receive these. Clearly the benefit system can make a huge difference, but basic benefit levels need to be high enough for people to afford the essentials so these disability benefits can be used for the purpose intended: to cover the additional costs associated with being disabled.
- Reduce your housing costs. For people in very deep poverty, finding a way to lower housing costs can help to increase their income for other essentials. This perhaps explains why people in working-age households in very deep poverty are more likely than those not in very deep poverty to report a fall in housing costs the following year. This is particularly the case for people who escape very deep poverty, who are more likely to report a fall in housing costs (16%) than those who remain in very deep poverty (14%). However, not everyone can lower their housing costs, as it depends heavily on the conditions of the local housing market and the need to stay close to social networks, schools and jobs.
- Have a strong social network. Having friends, family and neighbours who can offer support does not necessarily increase your chances of escaping very deep poverty, but it does appear to reduce some of its worst effects. This may be because they can provide informal financial help and advice. For example, people who move into very deep poverty who can rely on friends a lot are around half as likely to be behind on household bills and council tax as those who cannot rely on them at all. They are also around a quarter less likely to be behind on housing costs. The challenge for this strategy is that the experience of very deep poverty is an isolating one that weakens social ties.
- Have savings to fall back on. People who move into very deep poverty who had reported saving any money the previous year were around half as likely to be behind on their household bills or council tax payments as those who had not saved. They were also less likely to be behind with housing costs or to have struggled to keep their home warm in winter. However, people on low incomes are less likely to be able to save, even before moving into very deep poverty, so many do not have savings to fall back on. In addition, any protection afforded by savings is inevitably time limited as they will be depleted unless something else changes to help people exit very deep poverty.
What events increase people’s risk of moving into very deep poverty?
Events that erode people’s incomes increase their risk of moving into very deep poverty, as do life events that change people’s family situation. Each year, around one in twenty-five people (4%) not in very deep poverty move into very deep poverty the following year. This is much smaller than the exit rate, despite the actual number of people moving into and out of very deep poverty being similar, because over ten times more people in the UK live above than below the very deep poverty line. Key changes include:
- Relationship breakdown and bereavement. These are not only difficult events emotionally but also increase the risk of entering very deep poverty. Becoming single massively increases the risk of very deep poverty, especially for parents. Couple parent families not living in very deep poverty who change to a single-parent family have a one in seven chance (14%) of moving into very deep poverty. This is three-and-a-half times the entry rate for people who remain in couple families (4%).
- Job loss and reduced earnings greatly increase the risk of moving into very deep poverty. Someone whose family becomes workless is seven times more likely to move into very deep poverty than someone in a family where at least one adult remains in work (21% compared to 3%). In working households whose earnings fall by more than 10% or £20 per week – either because people work fewer hours or move into a lower paid job – people are six times more likely to move into very deep poverty than people in households whose earnings did not change (13% compared with 2%).
- Becoming self-employed is also associated with an increased risk of very deep poverty. More than one in fourteen (7%) employees who move into self-employment move into very deep poverty, compared with only 2% of people who remain employees. Even after the initial switch to self-employment, self-employed workers remain twice as likely to move into very deep poverty as employees.
- Having additional children increases household costs and makes it harder to balance working and caring. About one in fifteen people in families with children who have an additional child move into very deep poverty (7%) compared with around one in twenty people in families where the number of children remains the same (5%). Having additional children appears to have a bigger impact on very deep poverty entry rates than having a first child (5%).
- Rising housing costs reduce disposable income, enhancing people’s risk of very deep poverty. In households where housing costs increased, people entered very deep poverty at a rate of 6%, compared to 4% for people whose housing costs did not increase. Entry rates into very deep poverty are particularly high for social (12.5%) and private (10.0%) renters whose housing costs increase.
- Poor mental health. There is a vicious cycle between poor mental health and very deep poverty. Poor mental health increases the risk of entering very deep poverty; 25% of people who move into very deep poverty are already experiencing poor mental health, compared to 18% of the group who do not enter very deep poverty. The social isolation and financial stress experienced by many in very deep poverty also increases the risk of poor mental health. Someone entering very deep poverty is nearly twice as likely to develop poor mental health (if they did not already experience it) than someone who remains out of very deep poverty (19.1% compared with 11.7%). Once in very deep poverty, people with poor mental health are also more likely to be behind with essential costs.
What does this imply for how we reduce levels of hardship?
The events that are most strongly associated with people’s moves into and out of very deep poverty – changes to earnings, employment and relationship status – are similar to those associated with moves into and out of relative income poverty more broadly. But what this analysis really helps to underscore is the multidimensional nature of very deep poverty and how dynamic it is. Beneath the steadily rising overall number of people in very deep poverty, large numbers of people have moved in and out of it as their fortunes have waxed and waned. These are the moments in life when our social security system should be offering protection, but it is clearly failing to do that adequately, with over 12 million people experiencing very deep poverty at some point between 2017–18 and 2020–21. It is for this reason JRF and the Trussell Trust have been calling for an ‘essentials guarantee’ to be built into Universal Credit, so people can always at least afford life’s essentials.
But this needs to be complemented with other measures, such as increasing the number of good jobs offering regular hours, employment support that actually helps people to find a job that is a good fit for them, ensuring more housing is genuinely affordable and helping with housing costs. But life is not just about money. People’s relationships and networks clearly play a key role too, providing informal help and assisting people to access help and support to cope with living on very low incomes. Often this is the first line of support for people, and it can help to protect people from some of the worst effects of deprivation. There are clearly many points of intervention that can make a difference, and we will be exploring these themes further in a series of policy briefings later in 2023.
[i] Households below 40% of median income are defined as living in very deep poverty. In 2020/21, the latest financial year covered by the data used here, a single adult in very deep poverty would be living on £109 or less per week (after housing costs).